Testify, but first waive your privacy

Last week, a House subcommittee invited ordinary citizens, consumer advocates and credit card issuers to testify on a proposed credit card bill of rights that would ban abusive practices, such as arbitrary rate hikes or charging interest on balances already paid off.

Four consumers never got to testify, when they declined to sign waivers allowing credit issuers to make public their information.

They had flown in from around the country with their credit card bills in hand, only to learn that they couldn’t talk unless they would sign a waiver that would permit the credit card companies to make public anything they wanted to tell about their financial records, their credit histories, their purchases, and so on. The Republicans and Democrats had worked out a deal “to be fair to the credit card lenders.” These people couldn’t say anything unless they were willing to let the credit card companies strip them naked in public.

One consumer, Steven Autrey, planned to tell the legislators how he applied for a Capitol One card with a fixed rate only to discover that his so-called fixed rate had jumped to 16.9 percent several years later. Warren posts what Autrey would have said had he been allowed to testify here (PDF, 2 pp). Also, Autrey’s wife paid her bill on 9 p.m. the day it was due, but later learned that any payment that didn’t make the 3 p.m. cutoff was considered late.

Rep. Carolyn Maloney (D-NY), prime sponsor of the bill, said she postponed the panel of consumer testimony “in the interest of having the fairest hearing possible and protecting the privacy concerns of our consumer witnesses.” Others said the waiver was only fair to allow credit issuers to respond.

Maloney’s bill would do away with abusive practices, including double billing and requiring consumers to pay off balances with lower interest rates before those with higher rates. I blogged about it last month.

Needless to say, credit card issuers are opposed to it. John Finneran, general counsel for Capitol One, testified that:

[t]he consequence of so sweeping a bill would be to force the industry to raise the cost of credit for everyone, including those who present less risk of default to the lender, and reduce the availability of credit for those customers who present a greater risk of default.